May 3rd, 2006
What is Up with Wal-Mart’s Build-Your-Own Computer Plans?
By Alice Hill
RealTechNews
Alice’s Rant of the Week: This one has me shaking my head. US retailing giant Wal-Mart Inc. announced that it would begin selling “build your own computers” at some of its stores. So where to begin? How about some facts?
1. Most consumers don’t want to build their own PCs. They want them pre-assembled and as small as possible. We’re talking Mac Mini, or laptop territory. Not picking out a CPU and power supply like you do at Frys.
2. Wal-Mart has very high prices on consumer electronics, which takes advantage of less educated tech shoppers who think that because they save money on clothes and gum then of course they are getting a good deal on a big screen TV. Wal-Mart had admitted that the markup on some high end electronics products is abnormally high and was done so on purpose to make the items more for show than a real part of the store. Then people started buying them. This is changing and will change I predict, but hopefully most people learn that PC prices are not going to be rock bottom because they have Wal-Mart on the outside unless Wal-Mart gets super competitive. And Wal-Mart needs to get super competitive.
3. The desktop is fading. Laptops are more expensive make higher profits, break faster or get stolen and are basically the ideal item to stock and sell (less floorspace higher margin, and the shot at a pricey repair contract.) True, people will buy desktops, but why not just go with what will sell?
4. Geeks don’t shop for tech stuff at Wal-Mart. Sure the occasional mouse or keyboard, but why try and lure the gearhead when you have crowds of value shoppers prowling the aisles? Do they want to talk CPUs and SLI? No - they want a gallon of milk, a sweatshirt, and maybe a $19 DVD player.
Wal-Mart Stores Inc. will start selling build-your-own-computer components in more than one-third of its U.S. discount stores this month as it looks for ways to tempt shoppers to buy more than just low-margin food. Wal-Mart currently offers only prepackaged bundles of personal computers and accessories in most of its stores. With the build-your-own-computer counters, shoppers can choose between several different components.
Such components include central processing units — the brain of the computer that powers its basic functions — as well as monitors, keyboards and mice that customers can combine to create customized packages they can load in a shopping cart and take home right away. Source: Yahoo News
We Say: Good luck with that. Let me know when you give up and really drop the prices.
Josh says:
I have to disagree with you, entirely. Think about the dell model, where you pick what they want, and they put it together for you, based off of several standard model types. Walmart can easily sell those to the rednecks who shop there.
May 3rd, 2006 at 5:10 pm
Alice says:
But most people know what ham and swiss is. Are they going to have old ladies in blue vests explaining SLI???
May 3rd, 2006 at 5:14 pm
David Johnston says:
The other difference between this and the Dell model is that Dell makes sure that any parts you select are compatible with one another. You can’t accidentally get a processor that isn’t compatible with your motherboard. I’m sure you’re going to see a lot of people who don’t really know a lot going to Wal-Mart to upgrade their CPU and either being very disappointed or breaking their computers when they find that it uses a different socket than their motherboard has.
For example, I think there are 4 different sockets for Pentium 4’s alone!
You’ll find this with many, many things. Another problem will be people buying higher-end graphics cards that draw more power than their power supply can handle or getting a PCI-Express card when their motherboard only has AGP.
Basically, I think this is a very bad market for Wal-Mart to be getting into. It will start to hurt their reputation if they screw it up, and the chances of that happening seem high.
May 3rd, 2006 at 5:18 pm
Alice says:
They already sell bundles. Just undercut Dell and let people take home in-the-box pre-built solutions for $299. That will wake up the industry. But build your own??
When I go to our Texas office I always stop by the Irving Wal-Mart because is it so big it makes my city gal eyes pop out. And I look at the electronics and someone has always pulled off the buttons on the printers and messed up the flat panel screens with dust and smudges.
Plus, Dell has made a business out of building things to order. Is Wal-Mart going to have a million graphics cards and CPUs gathering dust to offer choices? I mean a red case or a clear one - OK, but the article said CPUs and so on. Scary.
May 3rd, 2006 at 5:28 pm
Basil says:
I’m sorry but this is the sillyest editorial ive ever seen, case and point,
1. Wal-Mart’s bull shit about “customer always” is usually true to the naked eye, they would prolly have a questionare about what will you be doint with your new computer?” “will you be playing videogames?” kind of crap to customize it.
2. two words, wal-mart motherboards, they could start selling even with a low profit margin, but they are all about moving stock quickly, it could start the largerst mass production cpu since the commdore64, then cost come down down down
3. with all wal-mart handeled parts and very low model variance they would have no problem
4. Wal-mart wants more money and more customers, less forothe corporations, with an older (and trusting) baby boomers who more and more want to webcame too their grand children and the like, a simple questionare like i mentioned above would open a huge market share never attempted, and a growning young, making less money and knowing less about tech (just using it) are going to each want one for their bedroom, just like their tv
5. basically i think you took it too literaly that they would build their own, and even if everything i said is wrong, you underestimate the lengths wal-mart will go to to make money
May 3rd, 2006 at 7:40 pm
Peter says:
To me, this sounds more like “You get to choose your CPU, (That box you attach the keyboard, mouse, and monitor to) the keyboard, monitor, and mouse!”
So, uh, no real customizations are actually available. At least, that’s what it sounds like to me from reading the Yahoo! News article.
I’m thinking people’d be able to choose between a white, black, or silver Intel or AMD “CPU” with matching monitor, mouse, and keyboard.
May 3rd, 2006 at 7:57 pm
Alice says:
I agree with both of the last postings in some key ways, but still am sticking to my guns. One, if it is about mnaking money I do believe Basil that Wal-Mart will figure it out and get smart about it.
And second to Peter’s point, if they change the case color and offer choice of processors, then that could be OK, but what I have been seeing points more to the Fry’s model where you build you own PC. You buy a motherboard and CPU and so on.
That concept doesn’t add up because the crowd in the Wal-Marts I have seen are looking for low cost and ease. Like the $19 DVD players. They were TINY, they were easy to tuck into a cart and forget about, and no regrets at the cash register.
Why would anyone buld their own PC at Wal-Mart, especially if you can’t serve yourself and go? If you have to wait and pick a case, mouse and keyboard combo, that will be too slow. You need a simple box you can toss in your cart with no assistance. Model #1, model #2 etc. But that is not *building a PC*, it is choosing a boxed setup, so I guess we will wait and see.
I am going to Texas May 21 and will make sure I check out the flagship store in Irving. There is a Frys right down the street (3 miles in TX speak) and I will send an update.
May 3rd, 2006 at 8:35 pm
MarcosV says:
Maybe Walmart is trying to get a different sort of people to shop at Walmart. Maybe this is aimed at techies who don’t have a Fry’s Electronics in the nieghborhood.
I wonder about the return abuse though. Fry’s is setup to test returned CPUs and motherboards on the spot. Wonder how Walmart sees it.
May 4th, 2006 at 3:08 am
Christopher Martin says:
“True, people will buy desktops, but why not just go with what will sell?”
Huh?
May 4th, 2006 at 3:36 am
ed3 says:
This is the natural evolution of their computer offerings. They were one of the first “big box” retailers to dare sell PC’s pre-installed with Linux, or even without any OS at all (gasp! egad!! OS-less PCs are for pirates!! OMG!!). Custom PCs seems the natural next step.
And I’m in agreement with #8… Believe it or not, locations outside of San FranCISCO do not have computer shops every 100 yards. What the heck is a “Fry’s”?? Isn’t that the character from Futurama?? Around Knoxville TN the only “hard core” computer shop is CompUSA. We have Best Buy and Circuit City, but their computer selection is minimal and markup is just as bad as Wal-Mart, if not worse. Whereas you can’t swing a cat by the tail without hitting a Wal-Mart.
Sure, granny (born in the 1960’s) isn’t going to be in there buying a PC every week… But what about everyday Joe and Jane Doe, 30-somethings who were teens the late 80’s early 90’s, shop at Wal-Mart every weekend, own a couple game consoles (probably a PS2 and gen1 xBox) and just so happens their current home computers (yes, they have several by now) are getting as old as their kids??
In the end, Wal-Mart is a big company. They have a lot of smart people that have gotten them where they are today. If they are going to start selling custom computers in their stores, they have done the homework and think it’s a good idea somewhere. And they have the deep enough pockets to experiment with it while having no problem abandoning the project altogether if it fails.
May 4th, 2006 at 4:29 am
Lewie says:
I wish I had a Fry’s near me. Everytime I go to Phoenix I spend hours wandering around the Fry’s in Tempe. I doubt that WalMart is going to try to emulate the Fry’s model — where’s the floorspace coming from? They going to eliminate the sewing section? — but I’d like it if they did.
May 4th, 2006 at 8:19 am
Alice says:
There’s nothing wrong with them taking a stab at this - they have the money and the stores to do whatever they want. I just question this particular approach. If they sold $199 PCs - I would get in my car right now.
But cultivating a higher end customer means higher end stuff at higher end prices, and higher end usually means better looking, more unique, or name brand (status). They are doing that in ad campaigns targeting fashion when people come in for eye drops (that’s one ad I saw) and that is a tactic specifically going after Target who is having a lot of luck moving fashion and home accessories over socks and toothpaste.
OK…so next comes Costco. Wal-Mart tried to copy the Costco format with Sam’s Club but hasn’t made much of a dent. Costco has a very wealthy shopping demographic and sells a ton of electronics from high end flat panel sets to cordless phone systems and ink jet cartridges. But you won’t see them touching build your PCs. They move in deals and the buyers snap them up.
All I am says is: why pick “build-your own” as the way to go more high end? Why not offer really cheap laptops (and desktops) and TVs and so on and use the price muscle to win over the geeks? Geeks will then do what they do at electronic store like Frys and load up on socks and toothpaste, so you get a reverse trend in shopping!
Again, I have not seen these stores. I will be taking my camera to Wal-Mart in a few weeks when I go to Texas. But it just doesn’t add up.
And to my comment about desktops selling and yet not selling- I am saying that more and more people are buying laptops - they appeal to students, people scared of PCs, to business travelers and people who are space constrained. That’s why the build your own PC sounds a bit late in the game. Desktops are bulky and loud and have a ton of cords and cables. They also need more floor space to sell. Flat panel monitors and keyboard and mouse sets and laptops are tiny in comparison. They offer more profit and if price right, all those people who bought DVD players and TVs are probably ready now to trust Wal-Mart get a nice laptop for their kids or snap up a second PC for $299.
May 4th, 2006 at 10:09 am
Another Mike says:
Really to win over geeks willing enough to customize their own computer though, you need to do it with both choice AND price. No one is looking at walmart as a good Fry’s replacement. They just don’t have the experience or reputation of being any good in that department. But while their individual component prices may add up, if they can really get the prices on “build your own” down, maybe they’ll get a few customers. Never from the average joe customer, that’s just silly.
But maybe a few knowledgable people who see that the price of “building your own” at Walmart is the same price as “building your own” at home. Without the heartache of putting it together on your own(speaking for those who always have a little trouble no matter how knowledgable you are). This can be acomplished only by the BIG BULLY of the industry, Walmart, because we all know that when walmart wants the industry to lower prices on items, they usually get their way.
May 4th, 2006 at 11:09 am
Bob says:
Wal-Mart will not be trying to sell DIY parts to just any customer that walks in th door. They are aiming the products at the thousands of people that already build and would like to buy parts locally. I would like to buy parts locally, but my budget can’t justify 30 - 40% markup over Newegg, Mwave, etc… just to buy it and have it now. But, if Newegg has the processor I want for $500 or I can go down the street to Wal-Mart and buy it for $449, what do you think I am going to do?
If Wal-Mart does this right they could make a killing.
May 4th, 2006 at 4:28 pm
Gord says:
Computer becomes appliance. People have wanted this for years. I know I’ve been dreaming of it. Now maybe WM will make it happen.
Gord
May 4th, 2006 at 11:38 pm
ed3 says:
> If they sold $199 PCs - I would get in my car right now.
They used to sell $200 PCs online, without rebates or signing your life away to AOL. Nothing any “savvy” computer person would buy, but there it was.
Cheap laptop?? Last day-after-Thanksgiving Wal-Mart was the first retailer to sell a sub-$300 laptop, albeit in limited quantities. Since then they keep a $400-$500 laptop in stock. Again, nothing a normal computer savvy person would even look at, but there it is.
> OK…so next comes Costco. Wal-Mart tried to copy the Costco format with
> Sam’s Club but hasn’t made much of a dent.
476 Costco stores versus the more than 500 Sam’s clubs… Don’t get me wrong. I loved Costco when I lived in Seattle and feel it is a slightly higher quality store, but there’s always a Sam’s Club nearby when I need one. Looking at their website Costco is clearly a California company, whereas Sam’s is, quite frankly, everywhere else…
> And to my comment about desktops selling and yet not selling- I am
> saying that more and more people are buying laptops
Laptops are junk when it comes to gaming and home multimedia. I’ve had nothing but heat and resource problems with the few laptops I’ve had over the years. A small SFF desktop with a nearly silent Seagate/Hitachi harddrive and quiet-if-not-silent cooling fans are perfect… All for under $400. Find me a laptop with a 160GB 7200RPM ATA/100 drive and 1GB memory for under $400.
Not to say I don’t have apprehension with their plan either. My local Wal-Mart has had the same $60 80GB Seagate drive sitting on the shelf for three years. I buy 160/200GB Seagates for $50 or less (after MIR) quite regular. However, if they can somehow manage to keep a regular flow of reasonably priced items on the shelves, they might be onto something.
Forgive me if you did not want to have this kind of debate in the comments. It is my opinion your view on this is slightly skewed, and for what it’s worth my view could be slightly skewed aswell. This will be my last comment on this topic. Thanks.
May 5th, 2006 at 3:04 am
D.David says:
What people are missing here is Wal-Mart’s business model. Wal-Mart deosn’t do anything except hire greeters and cashiers. The Vendors stock the shelves and keep the inventory flowing. If this idea flys (and I’m not saying it will) then the Vendors are going to be the ones doing all the work if they want the Mal-Mart business.
As an example I needed an electric power washer and I researched it on the web and then went to Lowes and Wal-Mart. The same model at Lowes was $9 more expensive and the same model at WalMart not only was cheaper but had an extra attachement. I bought it at Wal-Mart and then came back home, went to the manufactures web site and put in the model number. Sure enough the only place that sold that model number was Wal-Mart. Same exact specifications as the one offered a Lowes but with Wal-Mart’s buying power they were able to get the manufacturer to add an extra accesory and lower the price.
I live in the boonies and as much as I hate Wal-Mart’s predatory pricing policies the $9 I saved paid for the gas to get there. I love New Egg but sometimes I just want something right now and if Wal-Mart will have it then I will buy it.
Plus think of all the deals if this idea goes bust and the Vendors have to eat the unsold parts.
May 6th, 2006 at 5:39 am
Office Supply Store says:
Office Supply Store…
Office Supply Store…
October 8th, 2007 at 1:26 pm